The StartupAUS Crossroads report for 2016 has been released, providing a detailed review of Australia’s startup ecosystem.
Crossroads is the most comprehensive analysis of Australia’s startup ecosystem ever written. It explains the ins-and-outs of the sector, how it works, what it needs and even how it compares to the rest of the world. The first Crossroads was released in 2014, and made the case for technological innovation to be a core pillar of our economy. The second Crossroads report, published in 2015, put forward the basis for what would become the National Innovation and Science Agenda in 2016 (Michael Bailey of the AFR says Crossroads 2015 was ‘plundered for policy’ by the Turnbull government).
It also outlines why startups are not the same as small businesses, demystifying a common misconception.
The two are confused often, and here is the entire sub-chapter from the report to provide a clear definition between the two.
The term “startup” is widely recognised to mean an emerging high growth technology-based business as defined above, whereas a “small business” is generally considered to be a business that is providing less differentiated products or services, is often trading in a confined geographical area, and even if it experiences growth will remain a small business over an extended period.
Startups, on the other hand, start small but have the capacity to experience massive and sustained growth, often enabling them to become significant players in global industries within a small number of years.
Small businesses are important to any economy because they are numerous (there are around 2 million in Australia) and they provide an income to a significant proportion of the workforce (they represent almost half Australia’s employment in the private non-financial sector). However, small businesses are not a source of significant potential economic growth in the same way that startups are.
From an economic policy perspective it is vital to make a clear distinction between startups and small businesses because they have very different needs.